PAC RESOURCES, INC., A CASE STUDY IN CONFLICT MANAGEMENT Homework Help

GUIDELINES FOR CASE STUDY ANALYSIS

Read case study and answer the five questions below.
Separate essential information from irrelevant or marginally relevant. Not all information given is equally significant. Case studies are designed to be challenging and nuanced.
Differentiate symptoms and causes. As in conflict management, the goal is to solve the real problem.Do not force a solution. Focus on careful analysis and recommend viable resolution methods. Remember

that there is generally not just one right answer. There are better choices that lead to more effective outcomes.
Substantiate what you say. Avoid sweeping generalizations or unsubstantiated assertions. Offer supporting evidence for your choices.
Frame your answers in the context of conflict management and conflict resolution systems.
Think outside the box in generating solutions.

PAC RESOURCES, INC., A CASE STUDY IN CONFLICT MANAGEMENT

OVERVIEW OF THE ORGANIZATION
PAC Resources is a small manufacturing company located in a mid-sized city in the upper Midwest. PAC manufactures high-quality specialty components for the computer industry. The company was founded

in 1994 by current CEO, David Dukakis. Dukakis was a talented young engineer in Silicon Valley. When the industry hit the skids in the early 1990s, he found himself out the door with little more than an

entrepreneurial spirit and a small severance package.

Dukakis left California, moved back to his home state and used his severance package to finance PAC Resources, starting the company in small rented quarters in a nearly vacant strip mall. He brought in Cliff

McNamara early on as chief financial officer. Dukakis was smart enough to know that he had no head for figures, but McNamara did. McNamara was an old college buddy, a super accounting wiz, and

somebody Dukakis could trust to squeeze as much mileage as possible out of his severance money. It was a good match. McNamara managed the business, and Dukakis was the idea man and designer of the

specialty components, patents of which were the backbone of PAC’s success. Today, the low-rent strip mall is a part of company history, and PAC employs 835 full-time workers in its own contemporary

facility built in 2002.

So far, PAC has not been significantly affected by the latest downturn in the industry. Its market niche continues to be high-quality, specialized equipment. The company is proud that its products continue to be

made in the United States and of its ISO quality certification granted by the International Organization for Standardization. Dukakis believes this is what has kept his company in business while others in the

industry shipped jobs offshore or went by the wayside.
PAC sells its own products and has a small customer base scattered throughout the United States and Asia, but this generates only a small percentage of PAC’s revenue. Eighty-three percent of PAC’s sales

come from building original specialty components for one manufacturer. This has been a steady income source for PAC, but heavy reliance on one customer is a significant source of worry for PAC’s

management team, especially because sales of finished products are down for this customer and cutbacks are expected. If the rumor proves true, PAC will not escape unscathed. Consequently, the push is on

for belt-tightening in the organization. PAC instituted a hiring freeze, and marketing and sales budgets were directed to increasing the company customer base. Canadian and European markets are being

explored, and while there is some interest, there are no solid contracts. PAC employees are understandably jittery.
Though PAC remains non-union, three years ago the organization went through a difficult period of employee unrest. There were complaints of poor management, inconsistently enforced policies and unfair

practices regarding job changes and movement of employees within the organization. Because of the company’s standing as a respected employer in the community, it was a significant public relations black eye

when an anonymous employee wrote a scathing letter to the editor of the local paper. This brought in union organizers who distributed leaflets and circulated authorization cards. To address employee concerns,

PAC responded with management training and reorganization of lower-level supervisory positions. A company-wide “Talk-to-the-Boss” program was implemented, allowing employees to bring issues to any

level of management without fear of reprisal. It seemed to help. The authorization cards failed to generate enough interest for an election, and things settled down. Unrest, though, never goes away entirely.

Employees became cynical about “Talk-to-the-Boss,” and “the union buzzards”, as Dukakis calls them, never completely went away.
Things have certainly changed for PAC from the old days of the store-front location and a handful of employees. Dukakis remains the CEO, but he no longer manages the day-to-day operations, spending his

time instead at his family’s summer retreat on the Maine coast or in the Caribbean during the winter months. Decision-making is primarily in the hands of McNamara, who is now the organization’s senior vice

president, and a second vice president, Mark Schilling. Schilling came to PAC eight years ago with an honors degree in human resources and a successful military career. With a history that has known only

growth and strong revenue, it will be a major culture change for PAC to respond to the eroding economy and a possible decline in sales. In addition to the hiring freeze, McNamara directed managers to cut

waste and improve productivity across the board. Employees were reminded that every department would be affected and that nothing was sacred.

THE HUMAN RESOURCES DEPARTMENT
Patricia Harris was HR director at PAC for eight years before her departure in 2010. The official word was that she had taken early retirement to spend more time with her family, but what everyone really

believed was that Schilling finally got fed up and gave her the boot. Of course, there was the official retirement party where everyone said how much they would miss her, but really, most employees in the

department raised a toast to her departure and gave a collective sigh of relief. Her management style—when she managed at all—was divisive. She had her favorites, especially Kathy Davis, PAC’s benefits

coordinator, for whom no perks were ever too many. Consequently, the compensation and benefits staff fared well under Harris because it was Davis’s area. Other employees in the HR department found

Harris to be unfair and abrasive even on the best of days. With approval from McNamara and Schilling, Harris and compensation manager, John Culbertson, had established a merit bonus plan early in Harris’s

tenure at PAC.
Though Harris continued to champion the bonus plan as a success in objectives and controlling costs, it has been a bone of contention across the organization, particularly in the HR department. The bonus plan

required everyone to have annual performance goals. Harris allowed Culbertson’s compensation and benefits staff to set their own goals, but for everyone else in the department, Harris alone set the goals with

no input from those expected to carry out the activities. The result was hard feelings and perceived inequity that continues today. There is grumbling that even with Harris’s departure, things never changed.

Davis still offloads most of her work on others and is never dependable for project completion, yet she and her staff members receive top-tier bonuses year after year. Even Culbertson seems to look the other

way. Other HR department employees feel their work is not supported by management and that there is little feedback on progress toward goals. For them, bonuses, if paid at all, are based on unknowns

controlled arbitrarily by Culbertson.

As a result, the HR department is rife with animosity and there is little cooperation across functional areas. Certainly things couldn’t get worse. When Harris retired, Schilling promoted Ben Trudeau, manager of

safety and security, into the director’s position, even though he had only been with PAC for a year before his promotion. Though Trudeau had reported directly to Harris, his good track record at safety and

security kept him below the radar of many of the problems in the HR department. As manager of safety and security, he focused primarily on increasing wellness activities. Establishing an active wellness team

across the organization, he became the most visible member of the HR department, and with his positive upbeat attitude, many employees thought of him as the organization’s “cheerleader.” Best of all, his

management style was the polar opposite of Harris’s. Where she micromanaged and criticized, Trudeau believed in encouragement and responsibility. Schilling thought Trudeau would bring a breath of fresh air

to the HR department, and he gave Trudeau free reign to make the changes necessary to turn the department around. When Trudeau moved into Harris’s old office, he set a big jar of candy on the desk and

invited everyone to stop by and chat with him whenever they wanted. Of course, Davis was first in the door.

HR Director: Ben Trudeau
HRD Manager: Kellie Stephens
Compensation and Benefits Manager: John Culbertson
Benefits Coordinator: Kathy Davis
Staffing Manager: Kim Wong
Safety and Security Manager: Jose Vasquez
Employee Relations Manager: Steve Wilson

EMPLOYEE RELATIONS
Steve Wilson has his hands full managing employee relations. There is always the union issue, and Wilson’s belief that “once employee dissent sets in, it never goes away” seems to be well founded. He knows

there is still an undercurrent for unionization, and he fears any cost-cutting will turn the undercurrent into a landslide. Wilson continues to send out the message that PAC wants to remain non-union and is willing

to listen to employees and address their concerns. A comprehensive employee survey was conducted by an outside firm shortly after the unionization attempt. It asked employees to comment on a variety of

issues, including their perception of management, PAC’s compensation policies, career opportunities and equity, and, of course, overall job satisfaction. Some changes were made as a result of the survey,

mostly enhanced communication efforts and not actual policy changes. Since compensation was an issue, more information was made available to employees regarding the compensation system. Specifically,

employees received a comprehensive chart identifying salary grades and corresponding job titles. The compensation staff answered questions, the idea being that if people understood the compensable factors

and the logic behind the system, they would perceive less inequity. Things quieted down a bit, but Steve knows compensation equity is always a bone of contention.

A second issue that emerged from the employee survey was the use of skip-level interviews where employees could raise issues to mangers two levels up. In other words, employees can discuss things with

their boss’s boss. Most managers did not fully support the idea, and Wilson suspects some feel threatened by the thought of their subordinates going around them to talk to the boss. He has heard some

grumbling, but he doesn’t think it is of too much concern because few employees actually take the initiative to talk with management.

The survey also pointed out some specific criticism of the HR department for lack of communication with employees. Employees said that when they brought problems to HR, HR did not listen and did not

respond. It really hit close to home when HR was called on the carpet. One employee response was particularly troubling to Wilson because the employee said she reported sexual harassment to HR twice; the

first time HR didn’t respond at all, and the second time HR’s response was that the employee should “focus on work and stop complaining.” Wilson couldn’t imagine anyone in HR responding with such a

statement, but he could not ignore the allegation. He felt they had dodged a bullet because there had been no other harassment complaints. He knew he had to do something. He started a hotline to HR that

was available 24/7 either online or by phone for employees to ask questions and report anything of concern, not just harassment. He called it “HR Answers” and subscribed to a call center in India to answer

and track the calls so the service could be available to employees at all times.

Wilson recently developed employee involvement teams. It was a hard sell because Schilling was against the process, claiming it gave employees too much latitude. The teams worked well for a while.

Employees had a forum to be heard, and some good suggestions were generated for productivity improvements. Wilson monitors the teams closely. He knows it’s a precarious situation between management

and staff, and he thinks he’ll never be comfortable enough to let them run on their own.
Wilson worked with Stevens to plan and facilitate training programs for all managers. They concentrated on discrimination and harassment. He hopes the training will forge a closer link between line

management practices and HR. All too often he finds himself untangling a mess created by a manager who inappropriately disciplines an employee without regard to policy and with no input from HR. He wants

supervisory employees to understand the complex responsibility imposed by their position between management and staff, and he wants to see consistent implementation of policies across departments. So far,

understanding and consistency are a long way off. Sometimes he thinks managers are just not paying attention.
Wilson knows things are about to change, and he is worried about the end outcome. He’s been told to work closely with Wong to develop a plan for a reduction in force, and he wants to ensure that all

decisions are appropriate and nondiscriminatory. He knows some managers are looking for any excuse to get rid of their union agitators. He is meeting tomorrow morning with team leaders. He’s received

word from Schilling that all actions arising from the employee involvement teams must be passed by Schilling for approval.

CURRENT SITUATION
Three months ago, Ben Trudeau, director of HR, resigned unexpectedly because a family emergency. Despite the hiring freeze, a quick but thorough selection process was conducted, and you were hired as

the new director of human resources. You’ve come to PAC with an HR degree from a respected university and with several years of experience as an HR generalist in a large organization. This is an

outstanding career opportunity for you. You will be a member of the management team, and this is a chance for you to make a real difference in the organization. Congratulations on your new position and

welcome to PAC Resources. It’s your first day on the job. You hang your diploma on the wall, arrange a few personal mementos on your desk and settle into Trudeau’s old chair. You notice his in-basket is

overflowing. You reach for the top file, open the bulging folder and start to read the stack of e-mails Trudeau printed out before he left.

EMAIL 1
To: All staff
From: Cliff McNamara, senior vice president
Like all of you, I have watched the downward turn in our national economy, and I worry about reports of declining sales in our industry. The business news is greeted with increasing concern each time we hear

of yet another company that moves jobs off-shore and shuts down its U.S. facilities. Throughout it all, PAC remains steadfast in our policy of American-made products, and it is the quality of our workforce

that has garnered our success. Each of you is to be commended for the good work that you do.
However, we must recognize that business cannot be sustained today with policies of the past. We must be proactive and anticipate change. Though the company remains healthy, our revenue has been flat for

the last two quarters, and sales projections indicate a downturn going into next year. This necessitates cost-saving measures throughout our organization. Mark Schilling and I will be meeting with all department

managers to determine specific goals and plans for the future. All departments will be involved.
With falling sales, there will be significant cuts in staffing expenses because our hiring freeze did not sufficiently reduce labor costs. We cannot continue to build and stockpile inventory without sales. Effective

immediately, all areas of the organization must plan for a 10 percent reduction in costs. I know this will be a difficult time for all of you, but know that this is for the health of the organization and not a reflection

of the quality of your work. As in the past, we will work together, and the good work that you do will sustain us during these difficult times.

EMAIL 2
To: Ben Trudeau, director, human resources
From: Steve Wilson, employee relations manager
Hi Ben,
Hey, sorry to bring all these problems to you when I know you have your hands full with the pending staff reduction, but we had another issue with Gary Stephens on the production floor this week. You know

he’s hot under the collar most of the time. He gets production out of his staff, but he certainly has issues as a supervisor. I don’t think he’s learned even one thing from all the management training Kellie’s group

has provided. He had a run-in with Lon Jeffers yesterday. I guess he and Lon really got into it—a real shouting match. In front of the whole shop, Gary fired Lon, marched him right over to his locker, dragged

out all his personal stuff and hauled it out the front door. Granted, Lon’s kind of a bad apple and having him gone might be for the best, but I had a call this morning from some junior lawyer at Ness, Terry and

Smith saying he was representing Lon in his employment lawsuit. I thought you’d want a heads up.
Hey, look at the bright side—one less person to downsize!

EMAIL 3
To: Steve Wilson, employee relations manager
From: Dick Remington, production foreman
Hey Steve – I don’t know what’s the matter with people these days. The rumor mill is crazy, and I know everybody’s nervous about possible layoffs, but we’ve got some real problem employees down here

on the production floor. Steve Welch and his gang are stirring things up with the unions again. He’s getting quite a following, and there’s a group that meets in the cafeteria at lunch and the talk is they are calling

the union to get out here again with the authorization cards. Attitudes are terrible, product damage is up, and production’s hitting the skids. I’m trying to put a stop to it—I changed everybody’s lunch schedule

to break up the group, and I transferred Steve to a different shift. Frankly, I’m looking forward to some good layoffs. You’d think they’d listen up and think about what’s good for them.

EMAIL 4
To: Steve Wilson, employee relations manager
From: Dick Remington, production foreman
Hey Steve – Some guy in a suit was here today, said he’s legal counsel for the union. Gave me a bunch of lip service about switching around employee lunches. Said it was an unfair labor practice. I told him to

get his fanny outta here. I’m the boss; I can make lunch schedules any way I want, and besides, we aren’t even a union shop. Can you believe the nerve of those guys?? He also said something about your

employee involvement teams, but I don’t know what he was talking about. He said he’d be around to see you later. I just thought I’d give you a heads up. When do we start the layoffs?

EMAIL 5
To: John Culbertson, compensation and benefits manager
Ben Trudeau, director, human resources
From: Kathy Davis, benefits coordinator
Hi John and Ben, I’m forwarding this on to you – I don’t know how this happened, but it looks like we’ll have to do something about it. It must have happened while I was on vacation. Thanks a bunch!
Kathy Davis
Forwarded message:
To: Kathy Davis, benefits coordinator
From: Mary Lou Flanagan, supervisor, CAD design
Kathy,
As you must be aware, Tracy Peters in CAD design went on approved family medical leave on the first of last month. Somebody in your department messed up the paperwork and put it through as a

termination instead of FMLA leave. She should have continued to get her regular salary because PAC policy allows her to use sick leave and vacation pay under FMLA. Because it was a termination, though,

her salary was cut off. She has direct deposit and didn’t even know it was cut off until her checks started bouncing. Now she has overdraft fees, she says her credit’s ruined, and her mortgage company is

threatening foreclosure. She is hopping mad, and I don’t blame her. She wants the mix-up fixed right now, she wants all the fees reimbursed, and you need to do something about her credit score and her

mortgage company. She says she’ll get an attorney if need be. It’s crazy, why would anybody think she was terminated, she’s my best CAD designer!

EMAIL 6
To: Jose Vasquez, manager, safety and security
Cc: Ben Trudeau, director, human resources
From: Maury Peterson, production supervisor, team 3
Hey Jose,
You know we’ve got Jerry Andrews out on workers’ comp for a back injury, but the scuttlebutt is that it’s not a PAC injury. Bill Peters went fishing with Jerry last weekend, and after a few beers, Jerry tells Bill

he hurt his back moving his sister’s refrigerator. The guys on the floor think it’s a big joke. Seems everybody but management knows that old ankle injury that kept Jerry off work a few years back was a

motorcycle accident and not a pallet that fell in the warehouse. I suggest you cut off his workers’ comp and put him at the top of the reduction list.

EMAIL 7
To: All employees
From: Cliff McNamara; senior vice president
Mark Schilling, vice president
In light of the economic difficulties we are experiencing, the following actions will become effective immediately. In addition to the hiring freeze already in place, compensation paid to all hourly and salaried

employees will remain at the current level until further notice. Accrual to the merit bonus system will end at the close of this quarter, and the bonus system will be eliminated at the end of this fiscal year. All travel

expenditures will be strictly scrutinized and must be approved by Cliff McNamara’s office. All equipment purchase orders will be delayed by 90 days and must then be approved by the office of Cliff

McNamara. Tuition reimbursement is discontinued, effective today.
In light of the importance of health care and retirement savings to the well-being of employees, PAC will, for the present time, continue its current level of employee health insurance coverage and PAC’s

contributions to employee retirement accounts. We are hoping these efficiencies will get us through these difficult times and sincerely appreciate your understanding and cooperation.

EMAIL 8
To: Ben Trudeau, director, human resources
From: Steve Wilson, employee relations
Re: Pending lawsuit
Hi Ben – It looks like we’ve got a bad one here. I have attached a copy of the letter I received from the law firm representing Beth Simmons. You remember Beth; she’s that girl who used to work in Design. I

thought she left PAC to go back to school, but I guess not. Looks like she’s got a chip on her shoulder. Her attorney claims she reported sexual harassment twice, and nothing was done about it. In fact, he

says that somebody in HR told her to stop complaining. I can’t imagine who would say such a thing, but looks like we’ve got to answer for it. He also claims when our HR people ignored her, she called our

HR Answers hotline, and all she got was somebody in India she couldn’t understand and who didn’t help her at all.
I don’t expect this to amount to anything, but the attorney wants to meet with us. I suspect they’re trying to strong-arm us for a settlement. When are you available? We should keep this off Mark Schilling’s

desk if possible. Agree?

IN THE HR DIRECTOR’S OFFICE
You frown as you close the file and set it back on top of the in-basket. There is a lot of work to be done here. There may be more to PAC Resources than you thought.

QUESTIONS

These questions should be addressed within the framework of conflict management. Responses will be evaluated on the basis of sound analysis of the information presented in the case; comprehensive, well-

reasoned arguments and recommendations; and evidence of ability to interpret and apply the material covered in the course. Each question is worth 20 points.

1. PAC, Inc. is experiencing workplace conflict. Identify as many as you can of both the sources and indicators of that conflict. Use textbook figures 2.2 and 2.3 to assist you. For each source and indicator

you identify, provide evidence from the case.

2. How would characterize PAC’s organizational capability to manage conflict? What specific recommendation(s), if any, would you as HR Director make to alter that capability?

3. Given the current state of employee relations, what are the prospects for union avoidance? At this stage, what can PAC do to discourage unionization by its employees without incurring charges of unfair

labor practices?

4. How should the employee involvement teams be managed? Would you recommend that they be disbanded? Why or why not?

5. How would you recommend that the sexual harassment case be handled? What might have avoided legal action? What can the company do going forward to improve its capability to manage this type of

conflict?